UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

|ý                                | Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended May 31, 2010                         
|-------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|r                                | Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________________ to ________________
|Commission File Number 000-53520

Santos Resource Corp.

Nevada 
			(State of Incorporation)
			98-0507846
			(I.R.S. Employer Identification No.)


11450 - 201A Street
			Maple Ridge, British Columbia  V2X 0Y4
			Tel: (604) 460-8440(Address and telephone number of
			Registrant's principal executive offices)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý
      No r

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes r
      No ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

|Large accelerated filer r                                              | Accelerated filer r        
|---------------------------------------------------------------------- | ---------------------------
|Non-accelerated filer r

(Do not check if a smaller reporting company) | Smaller reporting company ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ý
   No q

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Class: common stock - $0.001 par value
			
			Outstanding at July 15, 2010: 32,076,500


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2



















Santos Resource Corp.

Financial Statements

May 31, 2010

(Presented In US Dollars)

(unaudited - prepared by management)





















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3

Santos Resource
	Corp.(an Exploration stage company)
	Interim Balance Sheets
	At May 31, 2010
	(Expressed in US Dollars)
	(Unaudited) May 31, 2010
			 (Unaudited)
			
			February 28, 2010AssetsCurrent AssetsCash
			$
			14,803
			$
			307GST
			Receivable
			
			519
			
			733Total Assets
			$
			15,322
			$
			1,040Liabilities and Stockholders'
			Equity (Deficiency)Current LiabilitiesAccrued
			Payables
			$
			24,828
			$
			27,562Payable
			to Shareholders Note 3(b)
			
			29,489
			
			9,500Total Current Liabilities
			
			54,317
			
			37,062Stockholders' Equity
			(Deficiency)Common
			Stock (Note 5) 75,000,000 shares authorized, 
			$0.001 par value - 32,076,500 shares issued
			
			32,077
			
			32,077Additional paid in capital
			
			149,871
			
			149,871Deficit
			accumulated during the exploration stage
			
			(220,943)
			
			(217,970)Total Stockholders' Equity
			(Deficiency)
			
			(38,995)
			
			(36,022)Total Liabilities and
			Stockholders' Equity (Deficiency)
			$
			15,322
			$
			1,040 Nature of operations and
	continuance of Business - Note 1 On Behalf of the Board: /s/ Richard Pierce  Director /s/ Andrew Lee Smith  Director  The accompanying notes are an integral part of these interim financial
	statements    4 Santos
			Resource Corp.(an Exploration stage company)Interim Statements of Operations(Expressed in US Dollars)(Unaudited)Three 
			months 
			Ended
			
			Three 
			months 
			Ended
			
			Cumulative 
			toMay 31,
			
			May 31,
			
			May 31,2010
			
			2009
			
			2010ExpensesGeneral and Administrative
			$
			176
			$
			61
			$
			920Foreign Exchange
			
			-
			
			656
			
			109Mineral Property Costs
			
			-
			
			8,926
			
			69,689Professional Fees
			
			2,797
			
			(19)
			
			150,225Total Expenses
			
			2,973
			
			9,624
			
			220,943Net loss and comprehensive loss
			$
			(2,973)
			$
			(9,624)
			$
			(220,943)Net loss per shareBasic and diluted
			$
			(0.00)
			$
			(0.00)Weighted average number of
			sharesoutstanding - basic and diluted
			
			32,076,500
			
			32,076,500    The accompanying notes are an integral part of these interim financial
	statements       5  Santos Resource Corp.(an
			Exploration stage company)
			
			
			
			
			DeficitInterim Statement of Stockholders' Equity (Deficiency)
			
			
			Stock
			Additional
			Accumulated
			During the
			TotalAt
			May 31, 2010
			
			Common
			Par
			Paid-in
			Exploration
			Stockholders'(Expressed in US Dollars)
			
			Number
			Value
			Capital
			Stage
			EquityBalance, May 24, 2006(date of inception)
			
			-
			$          -
			$            -
			$              -
			$              -Net
			loss for the period endingFebruary 28, 2007
			
			-
			-
			-
			-
			-Balance, February 28, 2007
			
			-
			-
			-
			-
			-Capital Stock issued for subscriptionsreceivable at $0.0005 per share andservices at $0.005 per share
			19-Jun-07
			31,040,000
			31,040
			(15,520)
			
			15,520Mineral Property Option - Starfire Minerals
			25-Jun-07
			75,000
			75
			11,175
			-
			11,250Private Placement at $0.15 per share
			1-Feb-08
			961,500
			962
			143,264
			-
			144,226Private Placement Fees
			1-Feb-08
			-
			-
			(4,568)
			-
			(4,568)Net
			loss, for the year endingFebruary 29, 2008
			
			-
			-
			15,520
			(70,888)
			(55,368)Balance, February 29, 2008
			
			32,076,500
			32,077
			149,871
			(70,888)
			111,060Net
			loss, for the year endingFebruary 28, 2009
			
			-
			-
			-
			(92,777)
			(92,777)Balance, February 28, 2009
			
			32,076,500
			32,077
			149,871
			(163,665)
			18,283Net
			loss, for the year endingFebruary 28, 2010
			
			-
			-
			-
			(54,305)
			(54,305)Balance, February 28, 2010
			
			32,076,500
			32,077
			149,871
			(217,970)
			(36,022)Net
			loss, for the period endingMay 31, 2010
			
			-
			-
			-
			(2,973)
			(2,973)Balance, May 31, 2010
			
			32,076,500
			$32,077
			$149,871
			$(220,943)
			$(38,995) The accompanying notes are an integral part of
	these interim financial statements         6  Santos Resource Corp.(an Exploration stage company)Interim Statements of Cash Flows(Expressed in US Dollars)(Unaudited)Quarter Ended
			
			Quarter Ended
			
			Cumulative toMay 31,
			
			May 31,
			
			May 31,2010
			
			2009
			
			2010Cash flows used in Operating
			ActivitiesNet loss for the period
			$
			(2,973)
			$
			(9,624)
			$
			(220,943)Adjustments to net loss for
			non-cash activitiesShares issued for property
			acquisition
			
			-
			
			-
			
			11,250Services
			provided by founders in exchange 
    for shares
			
			-
			
			-
			
			15,520Unrealized foreign exchange
			loss (gain)
			
			-
			
			1,302
			
			(1,982)Decrease (Increase) in GST
			Receivable
			
			214
			
			-
			
			(519)Increase (Decrease) in
			accrued payables
			
			(2,734)
			
			(2,478)
			
			24,828Net cash used in operating
			activities
			
			(5,493)
			
			(10,800)
			
			(171,846)Cash flows from financing
			activitiesCapital Stock issued
			
			-
			
			-
			
			159,745Private Placement Fees
			
			-
			
			-
			
			(4,568)Advances from shareholders
			
			19,989
			
			-
			
			31,472Net cash flows from financing
			activities
			
			19,989
			
			-
			
			186,649Cash increase (decrease) during
			the period
			
			14,496
			
			(10,800)
			
			14,803Cash beginning of the period
			
			307
			
			38,661
			
			-Cash end of the period
			$
			14,803
			$
			27,861
			$
			14,803Interest Paid in the period
			
			-
			
			-
			
			-Income Taxes Paid in the period
			$
			-
			$
			-
			$
			- The accompanying notes are an integral part of these interim financial
	statements 7Santos Resource Corp. (an exploration stage company)
	Notes to the Financial Statements
	For the period ending May 31, 2010
	(Expressed in U.S. dollars)
	1)         Nature of
	Operations and Continuance of Business
	Santos
	Resource Corp. (the "Company") was incorporated in the state of Nevada on
	May 24, 2006.  The Company is an Exploration Stage Company.  The Company's
	principal business is the acquisition and exploration of mineral
	properties.  The Company has not presently determined whether its properties
	contain mineral reserves that are economically recoverable.
	The
	accompanying financial statements have been prepared on a going concern
	basis, which implies the Company will continue to realize its assets and
	discharge its liabilities in the normal course of business. The Company has
	never generated revenues since inception and has never paid any dividends
	and is unlikely to pay dividends or generate earnings in the immediate or
	foreseeable future. The continuation of the Company as a going concern is
	dependent upon the continued financial support from its shareholders, the
	ability of the Company to obtain necessary equity financing to continue
	operations, confirmation of the Company's interests in the underlying
	properties, and the attainment of profitable operations. As at May 31, 2010,
	the Company has never generated any revenues and has an accumulated loss of
	$220,943, since inception. These factors raise substantial doubt regarding
	the Company's ability to continue as a going concern. These financial
	statements do not include any adjustments to the recoverability and
	classification of recorded asset amounts and classification of liabilities
	that might be necessary should the Company be unable to continue as a going
	concern.
	2.         Summary of Significant Accounting Policies
	a)
	        Basis of Presentation
	These
	interim financial statements have been prepared in accordance with U.S.
	generally accepted accounting principles for interim financial information
	and with the instructions to Form 10-Q and Item 310(b) of Regulation S-B. 
	In the opinion of management, all adjustments (consisting of normal
	recurring accruals) considered necessary for a fair presentation have been
	included.  Operating results for the periods ended May 31, 2010 and 2009 are
	not necessarily indicative of the results that may be expected for any
	interim period or the entire year. These interim financial statements should
	be read in conjunction with the audited financial statements for the year
	ended February 28, 2010.
	b)        Recent
	Accounting Pronouncements
	In June 2009 the FASB
	established the Accounting Standards Codification ("Codification" or "ASC")
	as the source of authoritative accounting principles recognized by the FASB
	to be applied by nongovernmental entities in the preparation of financial
	statements in accordance with generally accepted accounting principles in
	the United States ("GAAP"). Rules and interpretive releases of the
	Securities and Exchange Commission ("SEC") issued under authority of federal
	securities laws are also sources of GAAP for SEC registrants. Existing GAAP
	was not intended to be changed as a result of the Codification, and
	accordingly the change did not impact our financial statements.
	
	
	
	
8 Santos Resource Corp. (an exploration stage company)
	Notes to the Financial Statements
	For the year ending May 31, 2010
	(Expressed in U.S. dollars)
	2.          Summary of
	Significant Accounting Policies (continued)
	b)         Recent
	Accounting Pronouncements (continued)
	Statement of Financial Accounting Standards ("SFAS") No.
	166 (ASC Topic 810), "Accounting for Transfers of Financial Assets - an
	Amendment of FASB Statement No. 140", SFAS No. 167 (ASC Topic 810),
	"Amendments to FASB Interpretation No. 46(R)", and SFAS No. 168 (ASC Topic
	105), "The FASB Accounting Standards Codification and the Hierarchy of
	Generally Accepted Accounting Principles - a replacement of FASB Statement
	No. 162" were recently issued. SFAS No. 166, 167, and 168 have no current
	applicability to the Company or their effect on the financial statements
	would not have been significant.
	Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC
	Topic 820), which amends Fair Value Measurements and Disclosures - Overall,
	ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, 
	ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include
	Software Elements, and various other ASU's No. 2009-2 through ASU No.
	2009-15 which contain technical corrections to existing guidance or affect
	guidance to specialized industries or entities were recently issued. These
	updates have no current applicability to the Company or their effect on the
	financial statements would not have been significant.
	3.          Related Party
	Transactions
	a)          On June 25, 2007, the Company issued 75,000 shares of common
	stock at $0.15 per share to Starfire Minerals as part of its contract to
	Option to Purchase Property in Quebec.  Richard Pierce, President of Santos
	Resource Corp. is a director on the board of each company.
	b)          A shareholder loaned the company US$9,500 (CAD$10,000) in May
	2007. The shareholder has loaned the company an additional CAD$20,000 for a
	total of CAD$30,000 as at May 31, 2010.  The loans are non interest bearing,
	unsecured and payable upon request from the shareholder; accordingly fair
	value cannot be reliably determined. 9Santos Resource Corp. (an exploration stage company)
	Notes to the Financial Statements
	For the period ending May 31, 2010
	(Expressed in U.S. dollars)
	4.         Mineral
	Properties
	On June
	25, 2007 the Company signed an option agreement, subsequently amended, to
	acquire a 75% interest in 18 mineral property claims in Northern Quebec
	known as the Lordeau Property, with Starfire Minerals Inc. ("Starfire").
	Santos was granted an option to acquire 75% of the right, title and
	undivided interest in the property (subject to the NSR Royalty reserved to
	Starfire). Terms and conditions are as follows:
	a)          $10,582 (CAD$10,000) cash payment by Santos on execution of this
	agreement (paid);
	b)         75,000 common shares of Santos to be allotted and issued and
	certificates therefore delivered to Starfire as follows (issued June 25,
	2007)
	c)         Exploration expenditures to be incurred;
	(i)         $24,094 (CAD$25,000) on or before September 19, 2008 (incurred);
	(ii)        $8,926 (CAD$10,260) on or before May 5, 2009 (incurred);
	(iii)       $14,088 (CAD$14,740) to be paid on or before August 31, 2010.
	In the event that the
	Company fails to incur the full amount of Expenditures in a given period,
	the Company may, within 45 days of the end of such period pay Starfire an
	amount equal to the outstanding balance to be incurred by way of 50% cash
	and 50% shares (valued at the weighted average trading price for during the
	10 trading days preceding the period end date).
	In
	addition, any shares delivered, cash payments made, or Expenditures incurred
	toward the option price that is over and above that required to be made
	during a particular time shall be carried forward and applied against the
	required payment in subsequent periods.
	Santos
	will pay Starfire a 3% net smelter return royalty ("NSR Royalty").  Santos
	may purchase in the aggregate up to two-thirds (i.e., 2% NSR Royalty) of the
	NSR Royalty on the basis of one hundred thousand dollars for each one-tenth
	percent of the NSR Royalty (i.e., $100,000 per 0.1% NSR Royalty) acquired on
	the first one-half of the NSR Royalty (i.e., the first 1% NSR Royalty), and
	one hundred fifty ($150,000) dollars for each one-tenth percent of the NSR
	Royalty (i.e., $150,000 per 0.1% NSR Royalty) thereafter for the remaining
	NSR Royalty (i.e., the remaining 1% NSR Royalty).  To exercise its option to
	purchase the NSR Royalty or any portion thereof, Santos must provide the
	Owner with at least 30 days advance written notice of its intention to do
	so, and must close upon each purchase within 60 days of each notice. 10Santos Resource Corp. (an exploration stage company)
	Notes to the Financial Statements
	For the period ending May 31, 2010
	(Expressed in U.S. dollars)
	5.         Common Stock
	On June
	19, 2007, the Company issued 31,040,000 shares of common stock at $0.0005
	per share for cash proceeds of $15,520 and contributed services of $15,520,
	to Directors, officers and a relative of a Director.
	On June
	25, 2007 the Company issued 75,000 shares of common stock to Starfire
	Minerals at $0.15 per share for proceeds of $11,250, as part of its contract
	to Option to purchase Property in Quebec.
	On
	February 1, 2008, the Company issued 961,500 shares of common stock at $0.15
	per share for proceeds of $144,226, all collected in fiscal 2008.
	6.         Financial
	Instruments
	The
	Company's financial instruments consist of cash, shareholder loans and
	accrued payables unless otherwise noted, it is management's opinion that the
	Company is not exposed to significant interest, currency, or credit risks
	arising from these financial instruments. The fair values of these financial
	instruments approximate their carrying value, unless otherwise noted.
	Currency
	risk is the risk to the Company's earnings that arises from fluctuations of
	foreign exchange rates and the degree of volatility of these rates. The
	Company does not use derivative instruments to reduce its exposure to
	foreign currency risk.
	At May 31,
	2010 the Company had the following financial assets and liabilities in
	Canadian dollars:
	USD
			equivalent
			
			CDN
			DollarsCash
			on deposit
			Due to
			Shareholder
			$
			$
			14,803
			29,489
			$
			$
			15,060
			30,000Accounts payable and accrued liabilities
			$
			24,828
			$
			25,258At May 31, 2010 US dollar
	amounts were converted at a rate of $1.01733 Canadian dollars to $1.00 US
	dollar.
	
	
11 Santos Resource Corp. (an exploration stage company)
	Notes to the Financial Statements
	For the period ending May 31, 2010
	(Expressed in U.S. dollars)
	7.         Income Taxes
	Potential
	benefits of income tax losses are not recognized in the accounts until
	realization is more likely than not. The Company has incurred net operating
	losses of approximately $220,000, which expire beginning in 2027. Pursuant
	to SFAS No. 109, the Company is required to compute tax asset benefits for
	net operating losses carried forward. The potential benefits of net
	operating losses have not been recognized in these financial statements
	because the Company cannot be assured it is more likely than not it will
	utilize the net operating losses carried forward in future years.
	The
	components of the net deferred tax asset at February 28, 2010 and the
	statutory tax rate, the effective tax rate and the elected amount of the
	valuation allowance are scheduled below:
	Year 
			ended 
			February 28,
			2010
			
			Year 
			ended 
			February 28,
			2009$
			
			$Net Loss
			54,305
			
			92,777Statutory Tax Rate
			35%
			
			35%Deferred Tax Asset
			19,010
			
			32,472Valuation Allowance
			(19,010)
			
			(32,472)Net Deferred Tax Asset
			-
			
			-


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12

Item 2.  Management's
Discussion and Analysis of Financial Condition and Results of Operations

THE FOLLOWING
PRESENTATION OF MANAGEMENT'S DISCUSSION AND ANALYSIS OF SANTOS RESOURCE CORP.
SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND OTHER FINANCIAL
INFORMATION INCLUDED HEREIN.

Overview

Santos
Resource Corp. (the "Company" or "Santos") was incorporated under the laws of
the state of Nevada on May 24, 2006.  We have not commenced business operations
and we are considered an exploration stage company.  We are defined as a "shell
company" under the Rule 405 of the Securities Act and Rule 12b-2 of the Exchange
Act because we have nominal operations and nominal assets.  To date, our
activities have been limited to organizational matters, obtaining a geological
report on the Lourdeau Claims and the preparation and filing of a registration
statement on Form S-1.

Lourdeau
Claims

Under the
Property Option Agreement entered into on June 25, 2007, we acquired an option
to acquire a 75% interest in and to 18 mineral claims called the Lourdeau Claims
from Starfire Minerals Inc., the registered owner of the Lourdeau Claims.  On
May 29, 2008, we amended the property option agreement whereby our option to
acquire the Lourdeau Claims is subject to the approval of the TSX Venture
Exchange, which approval was obtained in September 2008.  On April 23, 2009, we
amended the Property Option Agreement again, which extends the schedule for
Santos to incur a portion of the final $22,732 (CAD$25,000) of Expenditures to
earn Starfire's interest in the Lordeau Claims to April 30, 2010.  On April 26,
2010, we amended the Property Option Agreement, which extends the schedule for
Santos to incur the final $14,088 (CAD$14,740) of Expenditures in order to earn
75% of Starfire's interest in the Lourdeau Claims, from April 30, 2010 to August
31, 2010.  The Lourdeau Claims consist of 18 mineral claims covering
approximately 900.75 hectares (9.01 km2), located in the La Grande
geological area of Quebec in the James Bay Territory about 620 miles (1,000 km)
north of Montreal, Quebec.

Under the
Property Option Agreement, Starfire Minerals Inc. has a 3% Net Smelter Return ("NSR")
royalty interest in the Lourdeau Claims, if and when Santos exercises its option
to acquire a 75% interest in the Lourdeau Claims by making the required cash and
share payments.  NSR means the actual proceeds received from the sale of ore,
metals or concentrated products from the Lourdeau Property derived from
commercial production as recorded by the producer and net of any smelting and
refining charges, penalties, costs of transportation of ores, metals or
concentrates from the Lourdeau Property to any mint, smelter or other purchaser,
cost of insurance of the products, and any export and import taxes levied with
respect to production from the Lourdeau Property.

Santos also
has the right to purchase up to two-thirds of the NSR royalty (i.e. 2% of the
NSR royalty) on the basis of $100,000 for each 0.1% of the NSR royalty (i.e.
$100,000 per 0.1% NSR royalty) acquired on the first one-half of the NSR
royalty, and $150,000 for each 0.1% of the NSR royalty (i.e. $150,000 per 0.1%
NSR royalty) thereafter for the remaining NSR royalty (i.e. the remaining 1% NSR
royalty).  To exercise its option to purchase the NSR royalty or any portion
thereof, Santos must provide Starfire with at least 30 days advance written
notice of its intention to do so, and must close upon each purchase within 60
days of each notice.

Under the
Property Option Agreement, Santos is required to make all filings related to the
Lourdeau Property and to maintain the Lourdeau Claims in good standing by
preparing and filing the assessment reports, paying taxes and keeping the
Lourdeau Property free and clear of all liens and encumbrances.  The Lourdeau
Claims are in good standing until July 18, 2011
and have been assigned tenure numbers 87500, 87501, 87502, 87503, 87504, 87505,
87506, 87507, 87508, 87509, 87510, 87511, 87512, 87513, 87514, 87515, 87516 and
87517 by the Province of Quebec.

---

13

In order to
exercise the Option and to earn its 75% interest in the Property, Santos has to
pay Starfire $10,582 (CAD$10,000) in cash payment and issue 75,000 shares to
Starfire, and incur an aggregate of $47,024 (CAD$50,000) in expenditures before
August 31, 2010, within the following time schedule:

(a)        pay $10,582 (CAD$10,000) upon signing of the Property Option
Agreement (paid);

(b)        issue and deliver 75,000 shares within 10 business days of the date
of approval of the Property Option Agreement by the board of directors of Santos
(issued in June 2007);

(c)        incur $24,092 (CAD$25,000) of expenditures on the Lourdeau Property
on or before September 30, 2008 (in September 2008, Santos paid Starfire cash of
$24,092 instead of incurring expenditures on the property);

(d)        incur $8,926 (CAD$10,260) on the Lourdeau Property on or before May
11, 2009 (in May 2009 Santos paid Starfire cash of $8,926 instead of incurring
expenditures on the property); and

(e)        incur additional expenditures of approximately $14,088 (CAD$14,740)
on the Lourdeau Property on or before August 31, 2010.

Any shares
delivered, cash payments made, or expenditures incurred toward the option price
that is over and above that required to be made during a particular time will be
carried forward and applied against the required payment in subsequent periods.

If Santos does
not incur the full amount of expenditures within the set time period, Santos
may, within 45 days after the end of the period, pay Starfire the outstanding
balance to be incurred for that specific year by way of either 100% cash or 50%
cash and 50% shares (valued at the weighted average trading price during the 10
trading days preceding the period ended).  After these payments, the option from
Starfire remains in good standing and Santos will be deemed to have acquired 75%
of the Lourdeau Claims from Starfire.

Plan of
Operation

Our business
plan is to proceed with the exploration of the Lourdeau Claims to determine
whether there are commercially exploitable reserves of base and precious
metals.  We presently do not have funds to meet our general operating expenses
and to meet our obligations under the Property Option Agreement.  We do not have
the funds to conduct the recommended exploration program.  Due to extreme
weather conditions, exploration activities can only be conducted between June
and August of each year.  We are attempting to raise additional money, and have
not started the exploration program.  If we are able to raise additional money,
we can only conduct the exploration program recommended by Mr. Michel Boily in
the summer of 2010.  We anticipate the recommended program will cost
approximately $100,224 (CAD$107,570).

Mr. Michel
Boily, Ph.D., P. Geo. was hired by Santos to provide a Technical Report in July
2007 on the Lourdeau Claims.  Mr. Boily does not have
any interest in the Lourdeau Property or the Company.  The report is based on
published and private reports, maps and data provided by the Company and in the
public domain.

Mr. Boily
recommends a systemic surface sampling program of the Lourdeau Vein site and its
vicinity, and the northern edge of the Lourdeau Hill, incorporating grab and
channel sampling, in order to get a solid geochemical assay database.  Mr. Boily
recommends obtaining a helicopter-borne geophysical survey to cover the rest of
the Lourdeau Property.  Mr. Boily recommends the geophysical magnetic and
radiometric surveys to be done on a 100 m spaced grid.

Depending on
the results of this program, the next phase could involve a drilling campaign
which would define the targets acquired during the geophysical surveys and
sampling campaign.  The focus of the drilling will be the uranium-mineralized
sandstones at the Lourdeau Hill, with the gold, copper and silver-mineralized
metavolcanic constituting secondary targets.

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14

We anticipate
that additional funding will be in the form of equity financing from the sale of
our common stock.  However, we cannot provide investors with any assurance that
we will be able to raise sufficient funding from the sale of our common stock to
fund additional phases of the exploration program should we decide to proceed.
We believe that debt financing will not be an alternative for funding any
further phases in our exploration program. The risky nature of this enterprise
and lack of tangible assets places debt financing beyond the credit-worthiness
required by most banks or typical investors of corporate debt until such time as
an economically viable mine can be demonstrated. We do not have any arrangements
in place for any future equity financing.

Risk Factors

An investment
in Santos' common stock involves a number of very significant risks. 
Prospective investors should refer to all the risk factors disclosed in Santos'
Annual Report on Form 10-K filed with the SEC on May 28, 2010.

Financial
Condition

As at May 31,
2010, Santos had a cash balance of $14,803.  Management does not anticipate
generating any revenue for the foreseeable future.  When additional funds become
required, the additional funding will come from equity financing from the sale
of Santos' common stock.  If Santos is successful in completing an equity
financing, existing shareholders will experience dilution of their interest in
Santos.  Santos does not have any financing arranged and Santos cannot provide
investors with any assurance that Santos will be able to raise sufficient
funding from the sale of its common stock.  In the absence of such financing,
Santos' business will fail.

Based on the
nature of Santos' business, management anticipates incurring operating losses in
the foreseeable future.  Management bases this expectation, in part, on the fact
that very few mineral claims in the exploration stage ultimately develop into
producing, profitable mines.  Santos' future financial results are also
uncertain due to a number of factors, some of which are outside its control. 
These factors include, but are not limited to:

- Santos' ability to raise additional funding;
- the
	market price for minerals; and
- the
	results of Santos' proposed exploration programs on its exploration mineral
	properties.

Due to Santos'
lack of operating history and present inability to generate revenues, Santos'
auditors have stated their opinion that there currently exists a substantial
doubt about Santos' ability to continue as a going concern.  This means that
there is substantial doubt whether Santos can continue as an on going business
for the next 12 months unless we obtain additional capital to pay our bills.  We
presently do not have the funds to conduct the recommended exploration program. 
Further, even if Santos completes its current exploration program, we will
require additional funds in order to place the Lourdeau Claims into commercial
production.

Liquidity

Santos'
internal sources of liquidity will be loans that may be available to Santos from
management.  Although Santos has no written arrangements with any of directors
and officers, Santos expects that the directors and officers will provide Santos
with internal sources of liquidity, if it is required.

Also, Santos'
external sources of liquidity will be private placements for equity conducted
outside the United States.  Since inception on May 24, 2006 to May 31, 2010,
Santos did not complete any definitive arrangements for any external sources of
liquidity, except for a private placement in February 2008 where the Company
issued 961,500 shares of common stock at $0.15 per share for proceeds of
$144,226.

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15

Capital Resources

As of May 31, 2010, Santos had total assets of $15,322
and total liabilities of $54,317 for a net working capital deficiency of
$38,995, compared with a net working capital deficiency of $36,023 as of
February 28, 2010 (an increase of $2,972).  The assets as at May 31, 2010 are
comprised of cash of $14,803 and GST recoverable of $519.  The liabilities as at
May 31, 2010 consisted of shareholders loan of $29,489 and accounts payables of
$24,828.

There are no
assurances that Santos will be able to achieve further sales of its common stock
or any other form of additional financing.  If Santos is unable to achieve the
financing necessary to continue its plan of operations, then Santos will not be
able to continue its exploration programs and its business will fail.

Management
does not believe that Santos' current cash will be sufficient to meet our
general operating expenses for the next 12 months and to meet our obligations
under the Property Option Agreement.  We do not have the funds to conduct the
recommended exploration program which is estimated to cost approximately
$100,224 (CAD$107,570).  We need to raise additional money to conduct our
exploration program.  If we are able to raise additional money, we plan to
conduct our exploration program in the summer of 2010.

Results of Operations

Our results of
operations for the three month periods ended May 31, 2010 and 2009 are
summarized as follows:

| |                      |   | Three months 
		ended May 31,2010 |   | Three months 
		ended May 31,2009
| | -------------------- | - | --------------------------------- | - | ---------------------------------
| | Revenue              | $ | -                                 | $ | -                                
| | Operating
		Expenses | $ | 2,973                             | $ | 9,624                            
| | Net Loss             | $ | 2,973                             | $ | 9,624                            

We did not
earn any revenues for the three months ended May 31, 2010 and 2009.  We do not
anticipate earning revenues until such time as we have entered into commercial
production of our mineral properties. We are presently in the exploration stage
of our business and we can provide no assurance that we will discover
commercially exploitable levels of mineral resources on our properties, or if
such resources are discovered, that we will enter into commercial production of
our mineral properties.

Our expenses
for the three month periods ended May 31, 2010 and 2009 are outlined in the
table below:

| |                            |   | Three months ended May 31,2010 |   | Three months ended May 31,2009
| | -------------------------- | - | ------------------------------ | - | ------------------------------
| | General and Administrative | $ | 176                            | $ | 61                            
| | Foreign
		Exchange         |   | -                              |   | 656                           
| | Mineral
		Property Costs   |   | -                              |   | 8,926                         
| | Professional Fees          |   | 2,797                          |   | (19)                          
| | Total                      | $ | 2,973                          | $ | 9,624                         

The increase
in professional fees for the three months ended May 31, 2010 compared to the
three months ended May 31, 2009 was due to the Company over accruing for
professional fees for the year ended Feb 28, 2008.

Off-Balance Sheet Arrangements

Santos has no
off-balance sheet arrangements.

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16

Cautionary Statement Regarding Forward-Looking Statements

This quarterly
report contains certain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These include statements about our
expectations, beliefs, intentions or strategies for the future, which we
indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
"will," "we believe," "our company believes," "management believes" and similar
language. These forward-looking statements are based on our current expectations
and are subject to certain risks, uncertainties and assumptions, including those
set forth in the following discussion, including under the heading "Risk
Factors". Our actual results may differ materially from results anticipated in
these forward-looking statements. We base our forward-looking statements on
information currently available to us, and we assume no obligation to update
them. In addition, our historical financial performance is not necessarily
indicative of the results that may be expected in the future and we believe that
such comparisons cannot be relied upon as indicators of future performance.
Other important factors that could cause actual results to differ materially
include the following: business conditions, the price of precious metals,
ability to attract and retain personnel; the price of the Company's stock; and
the risk factors set forth from time to time in the Company's SEC reports,
including but not limited to its annual report on Form 10-K; its quarterly
reports on Form 10-Q; and any current reports on Form 8-K.  In addition, the
Company disclaims any obligation to update or correct any forward-looking
statements in all the Company's annual reports and SEC filings to reflect events
or circumstances after the date hereof.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not
applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the
supervision and with the participation of the Company's management, including
the Company's principal executive officer and principal financial officer, the
Company has evaluated the effectiveness of the design and operation of its
disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and
Rule 15d-15(e) as of the end of the period covered by this quarterly report. 
Based on that evaluation, the principal executive officer and principal
financial officer have identified that the lack of segregation of accounting
duties as a result of limited personnel resources is a material weakness of its
financial procedures.  Other than for this exception, the principal executive
officer and principal financial officer believe the disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms and that our disclosure and
controls are designed to ensure that information required to be disclosed by us
in the reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our principal executive officer and
principal financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. There were
no significant changes in the Company's internal controls or in other factors
that could significantly affect internal controls subsequent to the date of
their evaluation and there were no corrective actions with regard to significant
deficiencies and material weaknesses.

Changes in
Internal Control over Financial Reporting

None.





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17

PART II  -  OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of
Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior
Securities

None.

Item 4. Removed and Reserved



Item 5. Other Information

None.

Item 6. Exhibits

|            |                                                                                                                                                                                                              |                   | Incorporated by reference
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------- | -------------------------
|Exhibit No. | Description of Exhibit                                                                                                                                                                                       | Filed
			herewith | Form                     
|3.1         | Articles of Incorporation                                                                                                                                                                                    |                   | S-1                      
|3.2         | Bylaws                                                                                                                                                                                                       |                   | S-1                      
|4.1         | Specimen Stock Certificate                                                                                                                                                                                   |                   | S-1                      
|10.1        | Mineral Property Option Agreement dated
		June 25, 2007 between Starfire Minerals Inc. and Santos Resource Corp.,
		whereby Santos has an option to acquire a 75% interest in and to the
		Lourdeau Property |                   | S-1                      
|10.2        | Mineral Property Option Amending
		Agreement dated May 29, 2008 between Starfire Minerals Inc. and Santos
		Resource Corp.                                                                                   |                   | S-1                      
|10.3        | Mineral Property Option Agreement
		Amendment No. 2 dated April 23, 2009 between Starfire Minerals Inc. and
		Santos Resource Corp.                                                                          |                   | 10-K                     
|10.4        | Mineral Property Option Amending
		Agreement (third amendment) dated April 26, 2010 between Starfire
		Minerals Inc. and Santos Resource Corp.                                                               |                   | 8-K                      

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18



|            |                                                                                                                                             |                   | Incorporated by reference
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -------------------------
|Exhibit No. | Description of Exhibit                                                                                                                      | Filed
			herewith | Form                     
|31.1        | Certifications of Principal Executive
		Officer and Principal Financial Officer Pursuant to Section 302 of the
		Sarbanes-Oxley Act of 2002 | X                 |                          
|32.1        | Certifications of Principal Executive
		Officer and Principal Financial Officer Pursuant to Section 906 of the
		Sarbanes-Oxley Act of 2002 | X                 |                          





SIGNATURES

Pursuant to
the requirements of the Securities and Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.

|                     | SANTOS
		RESOURCE CORP.                                                                   
|-------------------- | ------------------------------------------------------------------------------------------
|Date:  July 15, 2010 | By:       /s/ Richard PierceRichard Pierce
            Director,
		President and Treasurer













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